Regulation

SEC charges Diebold with violation of FCPA for allegedly bribing government officials

140px-US-SecuritiesAndExchangeCommission-Seal.svgThe SEC charged Diebold, an Ohio-based ATM and bank security system manufacturer, on Tuesday with violating the Foreign Corrupt Practices Act after the company allegedly bribed officials at state-run banks to win business contracts.

The SEC alleges that, between 2005 and 2010, Diebold subsidiaries in China and Indonesia spent approximately $1.8 million on travel, entertainment and other gifts to senior officials who had the power to influence banks’ purchasing decisions.

Officials were rewarded with free trips to various destinations throughout the U.S. and Europe, and the expenditures were falsely recorded as legitimate training expenses in the company’s books. Its China subsidiary also provided annual cash gifts to government bank officials, ranging from less than $100 to more than $600.

The SEC also alleges that Diebold falsified books and records between 2005 and 2008 to hide over $1 million in bribes paid to employees at privately-owned banks across Russia. The company has agreed to pay more than $48 million to settle the charges and resolve the matter.

“A bribe is a bribe, whether it’s a stack of cash or an all-expense-paid trip to Europe,” Scott W. Friestad, an associate director in the SEC’s Division of Enforcement, said. “Public companies must be held accountable when they break the law to influence government officials with improper payments or gifts.”

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